The government has suspended the surcharge on import of fuel as relief to loss-incurring Ceylon Petroleum Corporation (CPC) and the listed Lanka IOC PLC, though there won’t be a change in prices at the retail level.
Surcharges applicable were Rs. 20 per litre of Petrol 95, 12 per litre of Auto Diesel and Rs. 30 per litre of Super Diesel.
The suspension has been ordered by Prime Minister Mahinda Rajapaksa in his capacity as the Minister of Finance and will be applicable between February 02 - 28. The Ministry will revisit the matter thereafter to assess whether the suspension needs to be continued or not.
The surcharge was originally imposed for three months till November 2020 and extended till 1 February as oil prices were lower.
However, the two oil companies have complained about the rise in cost in their procurement whilst retail prices have remained unchanged, hence taxes or duties must be revised or removed to reduce losses.
The removal of surcharge comes hot on the heels of Finance Minister Rajapaksa granting an enhanced duty waiver on customs duty on the import of petrol and diesel. Effective from 1 January, the new waiver ranged from a low of Rs. 11 per litre to a high of Rs. 17 per litre.
For example, the duty on Petrol having Octane 92 was at Rs. 50 per litre and there was an existing duty waiver of Rs. 7 per litre.
From 1 January, a new duty waiver of Rs. 11 per litre has been granted bringing the full waiver to Rs. 18. Recoverable Customs Import duty on this Octane 92 is now reduced to Rs. 32 per litre.
On Octane 95, as opposed to the prevailing Rs. 50 per litre import duty, the new rate will be Rs. 34 per litre.
The Finance Minister hasn't granted a waiver on the category of “Diesel Other” and the duty remains at Rs. 25 per litre.
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